Change shape to circle
Just select the edge loop (Alt +RMB). You will need to scale it flat if it isn't already, and since from your image it looks like "Y" is your local axis, scale it to zero on the y S > Y axis. In my image, "Z" is the local axis, I will scale to zero on the "Z" axis. 

Before Scaling:


After scaling:


Now use the "to sphere" tool. since it only has two dimensions, there won't be any sphere going on, just circle.

you can find this tool with Spacebar and then searching or Shift+Alt+S.